As a part of National Agriculture Market (NAM), Prime Minister Narendra Modi launched the national e-agriculture market on Thursday. These e-mandis (markets) will integrate the various vegetable markets across the country, bringing them all to one platform and registered farmers will now be able to sell their produce online in any of the markets where they can get the best price.
To be launched on a pilot basis, NAM will initially aim at integrating 21 mandis in eight states – Gujarat (3), Telangana (5), Rajasthan (1), Madhya Pradesh (1), Uttar Pradesh (5), Haryana (2), Jharkhand (2) and Himachal Pradesh (2). The government has projected a target of integrating as many as 200 mandis in 2016, another 220 in 2017 and finally, reaching a total of 585 mandis by 2018.
"On April 14, on the 125 birth anniversary of BR Ambedkar, Prime Minister Narendra Modi will launch the e-trading platform - NAM - which proposes to integrate 585 regulated wholesale market or agriculture produce market committees (APMCs) under one electronic platform," said agriculture minister Radha Mohan Singh said on Wednesday.
Almost everyone was skeptical when Arun Jaitley set a daring goal for the BJP government of doubling farmers’ average income in the next 5 years. A unified national market for agriculture commodities on an online platform seems like a great step towards the same. But as we all know, our government is a great planner but fails at execution.
Where is the need of such step?
To understand this, one must understand the Agricultural Produce Market Committee (APMC) acts enacted by State governments since the 1950s. The act came into action due to the unremitting exploitation of farmers in India. In villages, unable to afford the resources to farm, farmers generally had to borrow money from lenders who would then arbitrarily purchase the produce at any time at a price that the lender thought was best. With no options available to them, farmers had to comply with these terms and illiteracy augmented this. This resulted in farmers being in a perpetual debt.
Therefore, an act was passed which ensured that intermediaries (and money lenders) do not compel farmers to sell their produce at throwaway prices and their produce should first be bought at the market (mandi) to be put for auction to sell, which will get them all a fair price.
The APMC act has only seen a few changes since. The not yet integrated vegetable market faces severe limitations. One such is restricting the free flow of trade. The nearest mandi where the farmer is registered to sell has to be his first stop, which sometimes are located across the state. Now, to take their huge harvest to that mandi requires transportation which requires money. Farmers being unable to afford this are limited to just one mandi.
Also, to move the produce to another mandi in the same state, farmers have to bear substantial transaction costs and a separate license is required for each market.
How will NAM operate?
Each mandi, which agrees to come on board, will be provided with an electronic platform free of cost. This platform is being created under NAM through a special software developed by the agriculture ministry. To integrate under NAM, each state has to first amend its APMC Acts. These include adding a provision for electronic trading and providing a single license to anyone willing to trade through NAM.
This doesn’t mean that the various taxes will be levied. These reforms are still to come, and hopefully will, once all the states join in and an impact is seen. For now, the ease it can provide is that due to single registration given to traders in a state, the process will be shortened and all taxes can be paid at just one place.
NAM will also ensure the quality standards of agricultural goods sold through its platform. Supported by agriculture ministry, it will also bear all the installation and maintenance cost of the portal at all manids. According to Financial Express, the integration cost for local mandis and customisation of software, training, etc, will also be paid for by the ministry as a one-time grant of around Rs 30 lakh at the time of accepting the mandi in the national network.
Benefits for farmers
With NAM, if not now, the restrictions imposed by AMPC act will tend to decrease with time, therefore increasing the mobility of farmers. With an online portal, a network of physical mandis will be created allowing farmers to trade not only across state but across country. It will lead to an increase in choices available to all. The farmers will be able to choose from a range of traders, both offline and online, and sell to the one they deem is the right price.
Now that the portal is all set to go online, any transaction made, be it online or in person, will be recorded. This will reduce the chances of middlemen adding any extra cost or seeking double commission. Therefore, there will transparency in the system.
Given that a number of farmers are selling the same product on the portal, there will be an immediate increase in competition leading to increase in business over time.
According to ministry, 25 commodities such as onion, potato, apple, wheat, pulses, coarse grains and cotton, among others, have been identified for online trading. For cereal, pulses and oilseeds, government announces Minimum support prices (MSP). So farmers know in advance, what the price of their produce. However, the prices of fruits and vegetable tend to change with season. Farmers solely dependent on intermediaries for price discovery who then look for profit and thus exploit them. This will be significantly reduced when farmers can look for prices online at which their own product is sold across the country.
Agriculture ministry officials say that the gradual integration of all major mandis into NAM e-platform would ensure common procedures for issue of licenses, levy of fee and movement of produce. Over the next 5-7 years, the government is expecting significant benefits through higher returns to farmers, lower transaction costs for buyers, and stable prices and availability to consumers.
Scope for improvement?
The current plan of the government seems pretty good and with India it is important that baabt steps are taken. For this, the government gets a thumbs up. However, there is always room for improvement. To begin with, AMPC act for each state has to be amended and modified to match the progress. A number of states which have amended their APMC Acts are yet to make changes for allowing the sale of fruits and vegetables through e-trading platform. Experts say that as long as fruits and vegetables are kept outside the purview of NAM, the volatility in prices would continue, thus depriving farmers from getting better prices (FE).
Besides, the country’s two biggest mandis—Azadpur (Delhi) and Vashi (Mumbai)—have not yet agreed to come on board. Also, other than taxes by AMPC, barriers hampering interstate transfer of agricultural commodities and taxes levied by states like Punjab, Haryana and Andhra Pradesh on agricultural commodities trade have to be removed.
However, for now, we have to wait and watch how this plan conversts into action.